This item is a next step in reducing regulatory burdens relating to our accounting
and reporting requirements. The Commission's accounting and reporting rules impose
real costs on incumbent local exchange carriers. As such, the Commission needs to
ensure that each of these rules is truly necessary and that the benefits of retaining a rule
outweigh its costs. The Commission has endeavored to do so here and has eliminated a
large number of unnecessary rules.

In addition, the Commission has begun a further proceeding to address additional
streamlining of these rules. The Commission concludes that many of its rules--for
example the detailed requirements for continuing property records--serve no, or only a
limited, federal regulatory purpose and are burdensome. We decided not to eliminate
such requirements immediately--and, indeed, agreed to add several new
requirements--out of deference to the State commissions. Many of these commissions
currently rely on our rules to ensure that information is available to them. They assert it
would cause them hardship were we to cease this function immediately.

While I believe we should--and we have--worked hard to accommodate our
State colleagues' concerns, I am reluctant to continue in perpetuity federal rules that
serve only State needs. Rather, as we make clear in the further notice, the Commission
must, at some point in the future, eliminate requirements that no longer serve specific
federal needs. I also am hopeful that the Commission will soon be able to eliminate a
range of other requirements that serve only limited federal purposes and are unduly
burdensome, especially in light of alternative means to gather information.

I thus look forward to engaging in a dialogue with the States on how we can
develop a transition in which States can undertake greater responsibility for collecting the
information they need. In conducting this dialogue and developing such a glide path, I
urge all parties to consider whether we truly need much of the information that we
collect. Moreover, where this information is needed, we should examine alternative, less
burdensome means of collecting it. It is imperative that we move away from our narrow
focus on incumbent local exchange carriers as the sole source of this information. As
competition continues to develop and formerly distinct sectors of the communications
industry continue to converge, remaining accounting and reporting requirements
generally should fall on all classes of competitors equally.